Euro Traders Go Bearish Amid Currency's Worst Slump in 17 Months

Traders have turned their most bearish on the euro since March, according to data that shows a surge in demand for options to hedge against another drop in the currency. The euro hit its lowest value in 17 months, falling nearly 1% to $1.1242, and yields on bonds of more indebted euro zone economies such as France and Italy traded at multi-decade highs.

The three-month euro risk reversals, which reflect the difference between the cost of an option to buy the euro against the cost of one to sell it, fell to -1.132, its lowest level since March 13. The more negative the number, the greater the cost of a sell option relative to a buy option.

Implied volatility on euro options expiring in three months' time hit 6.45%, the highest since April 13. This indicates that traders are taking out protection against the possibility of large price swings in either direction.